'Linsanity' heading to Houston?

Breakout NBA star Jeremy Lin could be leaving the New York Knicks and signing with the Houston Rockets. (Source: Nicholas LA/Flickr)

(RNN) – It looks like the purveyor of Linsanity will be Rocket-fueled this NBA season, thanks to a loophole in the league's bargaining agreement.

Point guard Jeremy Lin will be leaving the New York Knicks for the Houston Rockets after signing a 3-year, $25 million contract, according to an ESPN report. The Knicks could match the offer, but that might cost them more than $20 million of additional luxury taxes in the third year of the deal.

New York has not made an official announcement on a decision, but the team appeared ready to move on without Lin after trading for another point guard – Raymond Felton – during the weekend.

For the Knicks, it would be as much of a public relations loss as a talent loss.

Lin, 23, went from being a virtual-unknown sleeping on a teammate's couch to a worldwide sensation in a matter of weeks. He took the starting point guard spot for New York in February and led the team on a 7-game win streak.

Lin averaged 21 points and more than eight assists per game for the month. He also reinvigorated the struggling team, had the top-selling jersey in the NBA and sparked the phenomenon of adding "Lin" to dozens of words.

After 25 starts, his season got cut short in March when a knee injury forced him to have surgery. His leaving for good would be a sour finish to New York's feel-good story.

Lin would give Houston its most marketable star since the oft-injured Yao Ming, and the starting PG position should be all his after the team traded Kyle Lowry.

The contract would not be outrageous by NBA standards, but it is a sizable commitment to a player who has not gone through a full season. Wherever he lands, Lin will not be catching anyone off guard and could have difficulties as teams make defending him a top priority.

He became a restricted free agent after the season ended, which means the Knicks could keep him as long as they equaled another team's offer. But the proposal from the Rockets used a strange aspect of player contract rules to make that choice difficult.

Here's how it works:

Every team has a maximum amount it can pay all its players each year, called a salary cap. If a team goes over that amount, it owes the NBA a luxury tax payment.

The luxury tax used to be dollar-for-dollar ($10 million over the cap, $10 million tax), but under the agreement made following the 2011 NBA lockout, teams will face even stiffer penalties starting in 2012. They also get worse the more years in a row a team is over.

The "poison pill" aspect of the contract offered by Houston comes with the back-loaded money involved. Lin would make roughly $5 million each of the first two seasons, then $15 million for the third.

As the team that offered the contract, the Rockets' salary cap would take on the annual average of the contract, or about $8 million per year. However, if the Knicks matched, they would take the actual per season amount onto their yearly cap.

The Knicks already have about $60 million invested in Carmelo Anthony, Tyson Chandler and Amar'e Stoudemire for 2014. That total should be close to the cap, and the team still needs nine other guys to fill out the team.

According to ESPN, the team has until 11:59 p.m. ET Tuesday to match Houston's offer.